Retail Lab Franchise Sees Business Boom

By Jennifer Johnson Backer

As insurance plans transfer more costs of procedures like lab work onto the consumer, entrepreneurs like Andrew Rock are seeing a growing niche.

Rock is the owner of the Memphis franchise of Any Lab Test Now, a storefront lab in Memphis that allows consumers to order from a menu of more than 8,000 lab tests – everything from thyroid hormone levels to cholesterol. Unlike a visit to a doctor, the lab doesn’t require referrals.

Franchises like the 5075 Park Ave. location of Any Lab Test Now act as a middleman. Consumers pay for the tests upfront and the lab sends the blood work to Memphis-based American Esoteric Laboratories. Within a few days, Any Lab Test Now receives the results and passes them along to the consumer.

“We are really a collection point,” Rock said. “We use the same certified laboratories that hospitals and physicians use.”

Rock says most Any Lab Test Now clients don’t have insurance or are insured under high-deductible insurance options. Most of the lab tests ordered at storefront laboratories like Any Lab Test Now cost about 50 percent less than labs ordered by physicians and hospitals; a cholesterol test will run you $50, blood type testing costs $29 and Vitamin D testing runs $129. That’s because labs like Rock’s don’t have the overhead costs of physicians and hospitals.

“We don’t have to pay for treatments or advice,” he said. “We can also operate in spaces with smaller square footages and can get people in and out very quickly.”

Retail lab chains like Any Lab Test Now are spreading quickly because of their convenience, affordability and confidentiality, Rock said. Just more than two years after he opened his first Any Lab Test Now location, Rock is opening a new location in Southaven this month. The grand opening is on May 16, with a ribbon cutting provided by the Southaven Chamber of Commerce at 4:30 p.m.

There are now more 150 Any Lab Test Now stores across the U.S. and several other national chains that are expanding.

Rock doesn’t think Any Lab Test Now’s popularity will wane anytime soon even with new Affordable Care Act provisions that require everyone to purchase health insurance. The health care law requires everyone to purchase a plan, but the cheapest plans – the bronze level – will have an actuarial value of 60 percent. That means these plans will still have very high deductibles and allow out-of-pocket spending up to thousands of dollars.

“We offer services that normally the general public doesn’t have access to. People can choose the tests themselves, so it gives them the freedom in proactively managing their health care,” Rock said.

Revenue gained about 40 percent from 2011 to 2012, and he’s expecting another 25 percent boost this year. Rock estimates his store generated about $90,000 in revenue its first year of operations.

While labs like Any Lab Test Now are popular with consumers, they are drawing concern from some physicians that worry consumers who order enough tests will eventually get a false-positive result without access to someone that can explain the results. Critics also say lab franchises are in the business of selling tests that doctors might have never ordered.

But Rock says his lab offers convenience, transparent pricing and that consumers can make an appointment with a physician to go over their lab results. Some local physicians also refer patients without insurance to the clinic.

“When they can go to a doctor with lab results in hand, they can have a frank and honest discussion, rather than getting a call two weeks later on the phone,” he said.

Privacy also is a concern for many patients who want STD testing, drug testing, or don’t want the results to be shared with their insurance companies.

Rock speaks from personal experience. Before he purchased Any Lab Test Now, he was laid off from a marketing firm and had a medical scare while uninsured. He was concerned about getting the necessary tests because positive results could have made insurance impossible to obtain or very expensive. Though the Affordable Care Act will now ban insurance companies from preventing patients with pre-existing conditions from obtaining insurance.

“I wish something like Any Lab Test Now had existed at the time,” he said. “I knew there had to be other people out there like me who had to spend money out of pocket on their medical expenses.”